The Panama Papers Scandal Explained And Why You Should Give A Damn
There’s a palpable, collective apathy towards the Panama Papers scandal, but don’t be quick to shrug it off. Yeah, it’s complicated as hell and the media are still trying to make sense of the sheer amount of information, but this really is the largest data leak exposing corruption the world has seen. Here’s why it matters.
Spare a thought today for Julian Assange. Having already spent the past three-and-a-half years living in the London Ecuadorial Embassy’s equivalent to the West Wing’s steam pipe trunk distribution venue, he’s now no longer even able to lay claim to the world’s largest data leak.
That title now belongs to German newspaper Süddeutsche Zeitung, which early last year received from an anonymous source what proved to be a data leak of unprecedented scale – some 2.6 Terabytes of information comprising around 11.5 million documents, or roughly 1,500 times the size of 2010’s Wikileaks dump. Perhaps no surprise, then, that Edward Snowden has declared it: “the biggest leak in the history of data journalism.”
To get you situated, first, watch this:
Now, read this:
Who Can We Thank?
To help review and interpret such an extraordinary amount of information, the documents of the leak were quickly made available in secret to around 400 global journalists from the ICIJ, or ‘International Consortium of Investigative Journalists’, including Britain’s BBC and Australia’s own Four Corners program.
Finally, yesterday – after a concerted year of phenomenal due diligence – the documents and the investigation were made public in a globally coordinated media release, the implications of which are only now beginning to be realised.
The ‘Big Bad’
At the heart of this story lies a Panamanian company whose name – Mossack Fonseca – sounds less like a law firm and more like an Eastern European insult you’d hurl at only your most despised enemies.
Run by two men, Jürgen Mossack and Ramón Fonseca, the law firm’s activities in the world of tax minimisation have, courtesy of the Panama Papers leak, now been revealed to operate on what experts are calling an ‘industrial scale’; setting up dummy or ‘shell’ companies, trusts and foundations in tax havens like the British Virgin Islands for its clients around the globe. To date, it’s estimated the number of these entities incorporated by the firm now comfortably exceeds 200,000, most of which have neither an office nor staff, and whose directors have no idea about the businesses to which their names are credited.
On the individual level, the Panama Papers reveal dealings between Mossack Fonseca and high-ranking FIFA executives (biiiiiiig surprise there), professional athletes and 12 current and former world leaders, along with many of their friends, family members and associates. Amongst those leaders named are Russian president Vladimir Putin (aka ‘the FIFA of presidents’), Pakistani Prime Minister Nawaz Sharif, former Iraqi vice president Ayad Allawi, Ukrainian president Petro Poroshenko and the late father of British Prime Minister David Cameron.
At the corporate level, more than 500 banks around the world have registered a combined total of nearly 16,000 shell companies with Mossack Fonseca, and it’s estimated the firm has, to date, overseen the secret transfer of approximately two trillion dollars.
Since the announcement of the Panama Papers on April 5, the ATO has confirmed it is now investigating over 800 Australian individuals named in the leaked documents, a number of whom have been subject to previous inquiries and – in some cases – prosecutions.
On the company level, the two biggest names to be revealed so far are resources giant BHP Billiton and security firm Wilson Security, whose contracts include offshore detention facilities and the ongoing defence of the Prime Minister, the Defence Department and…wait for it…the ATO. Put another way, if the tax office’s evidence suddenly goes missing in the coming months, our money’s on ‘Security Guard #3’.
Why does this ultimately matter?
Perhaps the most confronting revelation from this leak is that, with very few exceptions, everything outlined inside it is absolutely legal. Why then does it matter? Two reasons.
In the short term, the Panama Papers may help bring to justice some individuals and companies found to be in breach of their domestic (and possibly international) banking and income tax regulations – as already witnessed today with the sudden resignation of Icelandic Prime Minister, otherwise known as Üter from that Simpsons episode – David Gunnlaugsson. The papers also reveal dealings with a number of drug dealers, arms traffickers, fraudsters, organised crime syndicates and so-called ‘rogue nations’ such as Iran and North Korea, all of which do attract legal penalties if proven.
It’s the longer term implications, however, where the greatest impact could ultimately be felt.
That wealthy elites, governments and corporations structure their finances to secure tax minimisation is nothing new, as highlighted by the immediate global cynicism with which this news was greeted on social media (“Rich people screwing poor people again, stop the presses!”).
Instead, it’s the extent of this tax minimisation, both privately and commercially, especially by high-profile companies and state leaders, that may at last prove the tipping point upon which that widespread apathy and cynicism finally translates into concrete demand for change.
With an estimated $7.6 trillion thought to be buried in offshore tax havens around the world (accounting for almost 10% of all global wealth), the need for fundamental and global reform of the economic system has never been more apparent, or more pressing.
Why does Panama Papers matter? Because it’s pulled back the curtain, and that has both companies and individuals running scared. With the inner working of their corrupt, broken and extraordinarily exploitative system suddenly cast into the light, this could well be the world’s ‘Network moment‘, where just north of 7 billion people declare in one clear, united voice: “We’re mad as hell, and we’re not going to take this anymore!”
Or, put another way…
Tom is a former IP-lawyer and host of ABC’s ‘The Roast’. He is currently a political satirist, film critic and writer who believes cereal is an anytime food. Find him on Twitter @tomglasson